As expected, the BoJ took the path most beneficial to stocks — leaving rate targets where they’ve been (negative short-term rates, the 10Y at 0%) and mumbling something about being more flexible the future as they continue to strive for 2% inflation.
The actual goal, of course, is to prop up stocks while they try to find a way out the equity trap into which they’ve put themselves. This means further deflating the yen, which sent the USDJPY higher, which propped up stocks overnight.This is in line with our outlook on the yen, and facilitates the euro outlook as well. We’re completing our tenth week of currencies consolidating around a tightening range. It’s also known as coiling…as in that thing a snake does before striking.
Were the FAANGs not flaking, stocks could continue to rally in such an environment. But, the FAANGs are indeed in trouble, with several of them in real danger of breaking down. When we last took a look in April [see: Is the Market About to be De-FAANGed?], things were looking dicey. Now, they look downright scary.
We’ll take a look at them individually and see whether they have further to go.
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